Transcom - comment

The Swedish BPO reported mildly positive results for Q3 2024 as the turnaround continues. Revenues grew in 0.6% at EUR 180.7 million (vs. our expectations of EUR 185 million) as new contracts replaced old contracts though consumer demand (which impacts the Ecom & Tech segment) remained muted.  Q3 2024 EBITDA at EUR 23.8 million beat our expectations by EUR 7 million. Leverage remained elevated at 4.3x. The big outperformer was on the working capital front where the company was more efficient in realising cash from its receivables with increased factoring and improved cash collection cycles. The company generated free cash flow of EUR 2.8 million in Q3 2024 vs. our estimate of - EUR 7 million. The company expects topline growth, positive cash flow and leverage to continue into 2025. We will be updating our model and come out with a more in-depth analysis shortly.