Bittnet (BNET), a group of IT companies listed on the Main Market of the Bucharest Stock Exchange, published the pro-forma results recorded by the companies in the group at the end of 2022. The pro-forma results include the individual results of all the companies in the group, according to the declarations submitted to the Ministry of Finance. In 2022, Bittnet Group companies recorded cumulative revenues of 268.7 million lei, a 25% increase compared to 2021, taking into account 2021, for comparability, the results of TopTech and 2Net companies acquired by Bittnet Group in 2022.
The gross margin generated was 52.9 million lei, a 14% increase, and the cumulative operating profit was 8.5 million lei, approximately equal to the one registered in 2021. The group recorded a net increase of 18.9 million lei in cash flows, almost entirely from operations. Bittnet Group had 42.3 million lei in cash at the end of last year, an 81% increase.
The company’s management believes that the pro-forma results provide a more relevant and faithful picture of the company’s situation in terms of revenues and financial position.
“Since the listing of the company in 2015 on the Bucharest Stock Exchange, we have continuously focused on the accelerated growth of the group in sound conditions by paying increased attention to cash flow and operational profitability, but also by taking decisions that can create long-term value, regardless of short-term impact. As a result of this approach, the profit has fluctuated year-on-year, and investors have criticized us for not focusing more on this aspect. As we have mentioned on other occasions, we believe that, in our case, it is appropriate to look at the growth of the entire organization’s size first. On the other hand, the current size of the group, together with the M&A already signed, places us close enough to the revenue target of 500 million lei. So, for 2023-2024, the number one internal priority will be to extract more profitability from the current business, ” stated Mihai Logofătu, CEO of Bittnet Group.
In 2022, the Bittnet Education division consisting of Bittnet Systems, Computer Learning Center, and Equatorial Gaming recorded revenues of 22.2 million lei, a 27% increase compared to 2021, and a gross margin of 9 million lei, a 13% increase. At the end of last year, the division registered an accelerated growth in the volume of courses, over 550 private and public sessions, with over 5,900 trained participants, doubling their number compared to 2021.
As for the Cloud & Infrastructure division, which includes the companies Dendrio Solutions, TopTech, 2Net, and Optimizor, in 2022, it recorded total revenues of 210.6 million lei, an organic growth of 23%. Although this business segment recorded solid results in the revenue area, a negative impact was recorded at the profitability level, with a gross profit of 1.6 million lei, down 71%.
The reasons for the decline are multiple. On the one hand, the team expanded to support the next level of business. On the other hand, an accelerated increase in human resource costs was recorded, the company having to compete with global companies from this point of view. Also, another cause of this decrease was represented by the dysfunctions in the worldwide supply chain, which also led to an increased unpredictability of deliveries and, consequently, to a sub-optimal allocation of human resources.
In the cybersecurity area, FORT, the business pillar formed by Global Resolution Experts (GRX), GRX Advisory, and ISEC, recorded revenues of 15 million lei in 2022, a 43% increase compared to 2021, and a gross margin of 5.7 million lei, a 12% increase. The operating profit registered a 17% increase, reaching 4 million lei, amid the significant investments made during the past year in developing this business pillar. The management of Bittnet Group believes that this increase of only 17% in operating profit will bring significant value to the shareholders of the group and FORT. Bittnet Group plans to list FORT on the Bucharest Stock Exchange this year.
At the level of the Platforms and Software Development division, composed of Elian Solutions, Nenos Software, and Nonlinear, increases were recorded at the revenue level of each company. Elian recorded a significant increase in revenue from client contracts, from 6.9 million lei in 2021 to 11.9 million lei, while Nenos Software recorded revenue of 2.9 million lei in 2022, compared to 2.7 million lei in the previous year, and Nonlinear reported revenues of 1.1 million lei, compared to 0.89 million lei in 2021.
“In 2022, the various business lines within the group had different evolutions, each with elements specific to the activity they carry out. Thus, the diversity of services and market niches that we cover, but also the diversity of the type of companies within the group and the stages of development, give us the advantage of growth in conditions of balance and stability, which allows us to address calmly, in an orderly manner and intelligent, the various problems that arise in every business. Also, the financial position at the end of 2022 is very good – 42 million lei in cash and trade liabilities, approximately equal to trade receivables. Combined with the capital increase currently underway and will be completed this month, we will have an equity base of roughly 100 million lei and a cash position of approximately 60 million lei very favorable to continue expansion in the following period. Taking into account the current size of the group and the M&A transactions that are being completed, plus the pipeline, we believe that we have all the necessary ingredients to reach the goal of 500 million lei in turnover in 2024 “, stated Cristian Logofătu, co-founder of Bittnet Group.
Regarding the M&A activity, the management underlines that the generation of consistent positive results by any company acquired by the group, but also in general, requires a period of about 18-24 months for integration, optimization, the fruition of synergies, and business scaling.
About Bitnet Group
Bittnet was founded in 2007 by brothers Mihai and Cristian Logofatu as a training and IT solutions company in Romania and abroad. Today, Bittnet is a Group of IT&C companies that includes the following brands: Bittnet Training, Dendrio, FORT, ELIAN Solutions, Equatorial Gaming, The eLearning Company, ISEC Associates, Computer Learning Center, Nenos Software & Nonlinear, Optimizor, 2Net Computer, and TopTech. Bittnet Group is listed on the Main Market of the Bucharest Stock Exchange under the symbol BNET.