Zalaris delivered its 11th consecutive quarter of revenue growth in Q324, alongside record quarterly revenue and profitability. Contract momentum continues with both existing clients and new contracts, resulting in a net retention rate within Managed Services of 108%. Zalaris has made good progress towards its mid-term adjusted EBIT margin target of 12–15%, with a 17.9% margin in the Managed Services business boosting group margins to 10.9% (Q323: 8.5%). The enhanced profitability has been driven by the strategic improvements to operations in Germany and increased use of near-shore and offshore service locations to drive efficiencies. Our estimates are unchanged as we expect a strong final quarter with maintained margin progression and contract momentum. Management noted it is making progress in the strategic review announced in April, although no outcome has yet been reported.

Zalaris delivered a tenth consecutive quarter of year-on-year revenue growth in Q224 to another record of NOK323m. The company continued to win new business as well as renegotiating contracts with existing customers to bring them onto the PeopleHub platform. Low churn also contributed to a net retention rate within Managed Services of 106%. Adjusted EBIT margins improved as the first Asia-Pacific contribution and cost efficiencies offset lower year-on-year margins in both Managed Services and Professional Services. The robust contract momentum has led us to upgrade our FY24 revenue estimates by 2.4% to NOK1,307m, with an improved adjusted EBIT margin of 11.2%. Management noted that the strategic review is in progress following an initial planning period.