Bittnet (BNET), a group of IT companies, listed on the Main Market of the Bucharest Stock Exchange reported 75.8 million lei consolidated revenues for the first nine months of 2020, an increase of 36% compared to the same period of last year. The rapid shift to the Low Touch Economy1 in the context of COVID-19 pandemic has been favorable for the Group. As a result, Bittnet closed the nine months with a gross margin of 14 million lei and an operating profit of 1.8 million lei.
“Over the past 6 months, we have launched several strategic projects that benefited from the global context of the COVID-19 pandemic, such as Work from Home and Business Continuity initiatives of Dendrio as well as DevOps Artisans and CTRL+N projects of Bittnet Training. We are proud to say that in the difficult context of a major sanitary crisis, our teams were at the forefront of the digital transformation process in Romania, helping our clients adapt to the new realities. The growth we have registered in the first 9 months of 2020, well above the IT market average of 12%, are the best proof of that” said Mihai Logofatu, CEO and co-founder of Bittnet Group.
Both divisions of the Group, Education and Technology, reported increases in operating profit in the first nine months of 2020 when compared to the same period of last year. The Education Division, which includes Bittnet Training and Equatorial, registered 7.4 million lei in turnover, equivalent to the performance from the same period of last year. The gross margin has however improved with 27%, reaching 4.2 million lei. As a result, Education Division ended the first 9 months of 2020 with operating profit of 0.3 million lei, a 200% increase when compared with an operating loss of 0.3 million lei registered at the end of Q3 2019.
The Technology Division, represented by Dendrio and Elian, registered a 42% increase in turnover compared to last year, closing the first nine months with sales of 68 million lei. The gross margin of the two companies grew by 239% in the first nine months of 2020, up to 9.7 million lei, while the operating profit increased by 6.7 million lei compared to the same period of last year, thus reaching 1.5 million lei.
“So far this year, Bittnet shareholders registered yield of 25%, well above the loss of 13% the BET-XT index that we are a part of, without considering the additional return recorded by investors who participated in the capital increase in March this year. We are optimistic about the remaining months of this year, but also about the prospects that the next year will bring us. As soon as we receive the ASF approval, we will carry out another capital increase operation offering investors a return of 20%. For the first quarter of next year, we want to continue strengthening the financial strength we are building, through a novelty on the Romanian capital market: public offer of preferential shares, which will allow us to eliminate financing costs, without diluting the voting rights of existing shareholders” said Cristian Logofatu, co-founder at Bittnet Group.
In October 2020, the Group has announced that it restarts the process of Mergers and Acquisitions on the local market. Consequently, at the upcoming General Meeting of the Shareholders, Bittnet shareholders will vote to approve four new M&A projects: acquisition of a 25% stake in a Romanian software development company, Softbinator Technologies SA, investment in ITPrepared SRL and The eLearning Company SRL as well as the acquisition of the remaining shares in Equatorial Gaming SA. Each of the acquisitions will help consolidate the Group’s activity in the two main areas, Education and Technology, thus contributing to the development of the portfolio at a time when digital transformation is the top priority for most of the companies.
1Low Touch Economy – the phenomenon refers to the way businesses across the globe have been forced to operate to succeed as a result of COVID-19. To mitigate health risks, businesses have been forced to adapt to strict policies, including low-touch interactions, limited gatherings, travel restrictions, and so on. Medical experts and business leaders assume Covid-19 will directly influence the economy until late 2021. Multiple aftershocks in global markets can already be seen. These include shifts in consumer behavior, new regulations, and supply chain disruptions. Businesses that survive the Covid-19 pandemic will be those that rely on business models tailored to this new normal while keeping everyone as safe as possible.