Entering 2023 after a well-played 2022
BTS' ability to re-allocate resources from the softening software market in San Francisco to other areas with higher demand in the US (financials, biotech and energy for example) was successful at driving revenues in Q4, but with some lead time costs hurting the margin in the quarter. The US margin was slightly weaker than we expected, and we estimate it to be down somewhat q-o-q in Q1e as well. On the other hand, both Europe and Other markets increased margins y-o-y in Q4. If the slowing market demand hits the rest of the World for BTS, however, we are cautious about extrapolating its re-allocation capabilities outside the US. We argue that it is not as smooth to move a consultant from Spain to a project in Sweden in the very short-term from a language barrier point of view as it is to re-allocate resources within in the US. With that said, BTS has a strong track-record of gaining ground in weaker markets, and we expect it to happen this time as well. We estimate 2023e adj. EBITA to grow 9% over 2022, in line with the guidance of "2023 EBITA better than 2022", driven by 5% organic growth (9% total sales growth) and a flat adj. EBITA margin of 13.8%.
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