Vitec Software Shares Plunge After Q2 2025 Results
Sweden’s quiet compounder stumbles: profit margins shrink, share price tumbles – but recurring revenue and long-term ambition remain intact.
Vitec Software Group, the Umeå-based provider of vertical software solutions, saw its share price drop by more than 16% today after releasing its second-quarter results. The decline brings the stock’s year-to-date loss to approximately 28%, a sharp reversal for a company long regarded as one of Sweden’s most dependable compounders — and a "Dividend Hero" known for its consistent, multi-year streak of dividend growth.
Behind the selloff lies a set of results that, while showing continued growth in sales, also reveal a meaningful deterioration in margins and profitability. In the three months ending June 30, net sales rose 4% year-over-year to SEK 916 million, with recurring revenues — the core of Vitec’s business — increasing 5% to SEK 813 million. Yet EBITA dropped 11% to SEK 236 million, and the EBITA margin narrowed from 30% to 26%. Earnings per share declined 17%, to SEK 2.64, while the operating margin slid from 22% to 19%.
VITEC AT A GLANCE
What they do: Vitec Software Group is a Swedish software company that provides software solutions for specific markets, such as real estate, finance, and healthcare. They offer both cloud-based and on-premise solutions. Vitec operates through six business areas offering software for property managers, media companies, energy and utility companies, banks and insurance companies. Subsidiaries include Futursoft OY, AutoData Norge AS, Tietomitta OY, Aloc A/S, Norwegian Fox Publish AS, Norwegian Insurance Computer Environment AS (Nice AS) and MV-Nordic A/S.
History: Founded in 1985, Vitec Software Group has grown through acquisitions of various software companies, expanding its reach in specialized markets.
Competitors: IFS AB, EPiServer, Visma.
Website: https://www.vitecsoftware.com/en/
Management pointed to the performance of Vitec Enova, a Dutch business unit focused on energy management and grid optimization, as a key driver of the margin pressure. The division is exposed to the volatile balance market, which saw exceptionally favorable pricing in Q2 2024 — a situation that did not repeat this year. Revenues from this segment were SEK 80 million lower, with an estimated SEK 30 million reduction in gross profit, only partially offset by stronger results elsewhere in the group.
Yet even in a softening market, Vitec continues to emphasize its long-term view. For the first half of 2025, group net sales rose 12%, recurring revenues increased 15%, and operating cash flow reached SEK 843 million, up from SEK 783 million a year ago. With a strong balance sheet and access to credit, the company reiterated its readiness to pursue new acquisitions — though it acknowledged that deal activity remains slow.
In his commentary, CEO Olle Backman stressed the group’s strategic consistency and commitment to stability, even as near-term profits fluctuate.
“Our customers should always feel that we work according to our brand promise — to rely on, today and tomorrow,” he said.
That brand promise has extended to shareholders as well. Vitec pays a quarterly dividend, an unusual structure in the Nordic tech space. While the current yield sits at just 0.8%, the company has raised its dividend every year since 2003, earning it the nickname of a "Dividend Hero" among Scandinavian income investors. After the recent selloff, the stock trades at a forward price/earnings ratio of approximately 33, based on estimated 2025 earnings — still high by historical standards, but now well off its earlier premium.
Investors will be watching closely to see whether Q2 marks a temporary dip or a broader reset in margins. In the meantime, Vitec continues to invest in AI-enabled enhancements across its business units, apply its acquisition playbook cautiously, and push forward with its “slow and steady” strategy — one that has paid off handsomely in the long term, even if 2025 has brought some short-term turbulence.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.