Span Group Records 11 Percent Higher Revenues and 162 Percent Higher Profit in the First Nine Months

In the first nine months of 2022, Span Group recorded 650.7 million kuna in consolidated revenues, which is an increase of 11 percent compared to the same period last year. During this time, the joint-stock company Span generated 549 million kuna and recorded a growth of 143.4 million kuna, or 35 percent compared to the same period last year.

Span Group achieved a total profit of 39.4 million kuna, which is a growth of 162 percent, while the company Span recorded a profit of 39 million kuna, marking an increase of as much as 276 percent compared to the same period in 2021.

The business revenues of Span Group increased by 65.4 million kuna during the observed period, of which revenues in the high value-added IT services segment grew by 73 million kuna, while revenues in the software asset management and licensing segment recorded a decline of 7.6 million kuna. The decrease in revenue stems from a drop in income in the Ukrainian market, as Microsoft allowed its users in Ukraine to use its products and services free of charge from April 1 to December 31, 2022.

During the same period, Span Company achieved a revenue growth of 143.4 million kuna, or 35 percent. The growth comes from business revenues that increased by 142.7 million kuna. The strongest revenue growth was recorded in the Infrastructure Services, Cloud, and Cyber Security segments, amounting to 83 percent.

Business Expense Growth

Total consolidated business expenses increased by 41.59 million kuna, or 7 percent compared to the first nine months of 2021. The growth in personnel costs is the largest generator of the overall cost increase, amounting to 42.7 million kuna, resulting from a larger number of employees and one-time costs arising from the allocation of shares to Ekobit employees.

The increase in personnel costs accompanies the revenue growth in the high value-added IT services segment. The average number of employees in the Group during the observed period in 2022 was 676, while last year the average number of employees in the Group was 527.

Costs of goods and services decreased by 11 million kuna and are the result of lower costs of goods and services in the Ukrainian market, while other members of Span Group recorded an increase in direct costs caused by the revenue growth of the rest of the Group.

Other business expenses of the Group increased by 9.9 million kuna under the influence of a larger volume of business and a greater number of employees.

Total expenses of Span Company increased by 118.3 million kuna, or 31 percent. The largest increase comes from direct costs of goods and services amounting to 82.5 million kuna.

Personnel costs of Span Company increased by 26.7 million kuna, or 35 percent. The average number of employees in the Company during the observed period was 518, while last year the average number of employees in the Company was 428. Most new employees were hired in the high value-added services segments.

EBITDA Increased by 68 Percent

Significant growth in EBITDA accompanies the revenue increase from high value-added IT services. The Group’s EBITDA before one-time items increased by 22.5 million kuna, or 68 percent, amounting to 55.4 million kuna.

One-time items of the Group’s EBITDA amounted to 3.5 million kuna and relate to costs arising from the Employee Share Ownership Plan defined in the purchase agreement, operational costs arising from the acquisition mainly related to consultant costs, and reserved costs for the ESOP employee share allocation program.

Span will allocate 25 percent of shares to each employee who retains one or more ESOP packages in their ownership during the three-year period, relative to the number of shares the employee holds within the ESOP package. After the first year from the date of public announcement of the results, 5 percent of the total number of shares will be allocated, and after the second and third years, 10 percent each.

Acquisition of Ekobit Increased Profit

Profit after tax before one-time items of the Group increased by 20 million kuna, to 40.6 million kuna.

One-time items of the Group’s net financial result amounted to 2.3 million kuna and relate to the acquisition of Ekobit. Financial revenues arose as a positive difference in the price of Ekobit’s own shares, i.e., the difference between the price at which Span purchased them and the price at which Ekobit acquired them in 2017.

During the observed period, profit after tax after one-time items of the Group increased by 24.3 million kuna, to 39.4 million kuna. Span Company records a growth in profit after tax before one-time items of 24 million kuna, to 39.9 million kuna.

Span Company records a growth in profit after tax after one-time items of 28.6 million kuna, to nearly 39 million kuna.

Cyber Security Center

Marijan Pongrac, a member of Span’s Management Board and Director of Technology, highlighted this year’s opening of Span’s Cyber Security Center in collaboration with the Israeli Cybergym. He explained that the number of cyber attacks is continuously increasing, along with the need for skilled and quality personnel. Currently, Europe lacks 200,000 cyber specialists, and it is also necessary to educate people about cyber threats.

– It is not enough to just ensure the best possible software for cyber protection and believe that the system will work on its own. Behind every cyber attack is an army of trained cyber criminals – real people. Quality software will help us recognize attacks and alert our experts who will fight the threat. However, once the enemy enters the house, it is not at all simple or cheap to get them out; and let’s not even talk about reputational damage. For that, a whole army of people on our side is needed, experts who are chronically lacking in the market, not only in Croatia but throughout Europe and the entire Western world.

Due to the lack of professionals in the market, the paradigm of customer and service provider is also changing. Companies that can provide customers with the necessary services are limited by capacity and are in high demand today. In recent years, it has become common for companies to prepay a spot on the incident respond list of cybersec companies, so they can count on them to jump in to help at a critical moment. If they do not reserve their spot on the list in advance, it is unlikely they will be able to purchase the necessary service when they need it, and internally no company has enough resources to expel attackers and mitigate damage.

Span’s Cyber Security Center aims to contribute to raising awareness of cyber danger through expert training and consulting for technical staff, ‘awareness’ training for other employee groups, as well as for Table Top exercises for management. Expert training covers defensive but also offensive techniques, as quality defense can only be learned through knowledge of offensive techniques – said Pongrac.

New Microsoft Program

At the end of September, Microsoft introduced a change in partner certifications. As of September 30, 2022, the Microsoft Partner Network Silver/Gold competencies were abolished and replaced by the new Microsoft Solution Partner program. As Pongrac emphasized, Span is fully prepared for this change.

– In the upcoming period, Span enters with as many as five out of a possible six Microsoft Solution Partner statuses, namely Infrastructure (Azure), Security, Modern Work, Digital & App Innovation (Azure), Data & AI (Azure). Additionally, we continue our development with 12 advanced specializations – said Pongrac.