Revenue at Scout took a slight dip in the third quarter compared to the previous year, but the company’s balance sheet showed signs of improvement as expenses were scaled back significantly. The trimming of costs was a direct result of Scout completing its transformation program in August—a strategic move that included workforce reductions. This pivotal change is a cornerstone of Scout’s efforts to become a leaner and more efficient entity, especially in its delivery of B2B services.
Former CEO Andreas Ternström initiated the cost-cutting measures last year, leading a charge to rein in expenses in the face of sluggish growth and ballooning costs that had been highlighted in the fourth quarter of 2021. Ternström departed from Scout in June 2022, but the initiatives he set in motion continued to roll out, concluding by August 2023.
Under the leadership of the current CEO, Niklas Jönsson, Scout has started to witness the positive impacts of its restructuring, although Jönsson has indicated that the full benefits are anticipated to materialize by the first quarter of 2024. These changes are expected to support the company’s long-term objective of achieving profitability.
In a statement, Jönsson elaborated on Scout’s strategies, noting, “To reach a sustainable balance between our revenue and our cost we announced a new reorganization package in August. Since then the expenses have decreased but the full effect will not be seen until first quarter 2024. We are positive to the outcome so far and will continue to monitor them until we reach a stable profitability.”
Jönsson also expressed confidence in the company’s recent choices and hinted at plans to ramp up B2C operations in the coming months, highlighting a cautious approach with an emphasis on a high return on investment.
The quarterly figures revealed a 4.6% revenue decline to SEK6.3m, while B2B revenue saw an encouraging jump of 15.9%, climbing to SEK5.4m. This uptick was linked to a sharper focus on B2B. B2C operations, however, faced a stark contrast with a 47.4% decrease to SEK1.0m, attributed to the phasing out of certain unprofitable marketing campaigns.
Scout remains optimistic about the B2C segment, believing there is potential for growth under controlled conditions, and aims to capture this in the latter part of the year.
The broader cost-containment efforts translated into a 27.8% reduction in operating expenses, touching SEK12.2m for the third quarter, predominantly due to halved staff expenses of SEK5.0m after the headcount reduction. Following finance-related expenses, Scout’s pre-tax loss was notably smaller at SEK5.8m, improving from last year’s SEK14.3m. Without income tax in Q3, the net loss remained the same, marking a considerable improvement from 2022’s figures. Adjusted EBITDA also recorded less red, improving from a loss of SEK10.2m to a loss of SEK5.9m.
For the nine-month period ending 30 September, Scout’s year-to-date revenue rose by 26.7% to SEK22.3m. However, while B2B revenue more than doubled to SEK18.0m, B2C revenue shrank by 48.4% to SEK4.4m. Operating costs for the period fell by 23.6% to SEK75.0m, again primarily due to reduced staff expenses. Finance costs came in at SEK2.8m, leading to a pre-tax loss of SEK60.2m, an improvement over last year’s loss of SEK64.4m. Similarly, the net loss improved, and the adjusted EBITDA loss was cut down from SEK57.2m to SEK21.8m.
“We are now halfway through the fourth quarter and it is encouraging the way which all my colleagues within Scout really are pushing forward to make our group profitable,” said Jönsson, expressing gratitude towards partners, shareholders, and employees for their support and belief in the company.
In the aftermath of Ternström’s exit, Scout faced the challenge of addressing unexpected financial obligations, which led to a decision to cut half of its workforce, including staff in Ukraine, aiming to save approximately SEK32.0m annually. In parallel, a share issue diluted holdings by 90% but managed to raise SEK101.0m.
Moving into 2023, the company seemed to be on a steadier path with Jönsson at the helm as a full-time CEO since March. Jönsson had improved Scout’s performance in his interim tenure before making further cuts to operating costs. With the promise of the transformation program’s completion and the anticipation of realizing its effects in 2024, Scout’s march towards profitability appears to be charted with a clear, albeit cautious, optimism.
